Question: A profit maximizing firm produces two products: X and Y. The firm has no costs.

There are three types of customers: 40 customers of type 1, 40 customers of type 2 and 20 customers of type 3.

Each customer is willing to purchase at most one unit of each of the two products.

The firm cannot price discriminate between the customers.

The following table presents the willingness to pay by each of the three types of customers for each of the two products:

a. What will be the price of each product, if the firm decides to sell them separately? What will be the firm's profit in this case?

b. Suppose, instead, that the firm decides to sell the two products only in a bundle. What price will the firm choose for that bundle? What will be its profit?

c. Is there a mixed strategy that is better for the firm than the two above?

d. Answer again parts a, b and c assuming that each product costs the producer $30.